TORONTO • An Ontario man facing charges in New York of masterminding the largest international penny stock fraud in history was thoroughly denounced in Toronto by the Ontario Securities Commission, Thursday, for approaching “a new standard” of predatory capital market fraud.

And for that, the OSC is asking that Sandy Winick, 55, be forever banned from securities trading and fined $1,250,000.

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Mr. Winick was not present to hear the damning indictment, having been arrested in Thailand last month and facing extradition to the United States, where he awaits trial for a different investment scheme, but it seems unlikely he would have attended even if he was free to; he has snubbed the commission’s authority at most every turn.

A talented confidence man, Mr. Winick is a master at conjuring the look and feel of legitimacy without any reality behind it.

The OSC tore apart his business practices in which he convinced foreign investors into paying large sums as purported investments in grand-sounding companies that did nothing but fund the personal expenses of Mr. Winick, his wife, the woman he sometimes lived with, and his associates in the schemes, including his underling, Greg Curry, 63, the OSC said.

He ‘simply cannot be trusted to deal in the capital markets’

Mr. Winick and his accomplices registered Liquid Gold International Corp. and BFM Industries Inc. as official companies, listing others as directors but with Mr. Winick controlling everything.

Liquid Gold’s website said the company “has assumed the leadership role in the recovery of additional hydrocarbons from domestic sources, lessening the United States’ dependence on foreign oil,” although the OSC determined the firm had no hydrocarbon or oil assets at all. BMF’s website made it look like BMF was actively engaged in the fertilizer business when, in fact, it never had any assets or real operations. The only money BMF was generating was from the aggressive sale of their own securities to foreign investors.

The shares were sold through an investment bank in Singapore, called Denver Gardner, that was even phonier than the companies it touted, the OSC said.

The Denver Gardner website describes itself as “a premier provider of wealth management, securities trading and sales, corporate finance and investment banking services.” The OSC probe concluded it was, in fact, “a fictional company invented by Winick to mislead investors about the identity of the sellers of BFM and Liquid Gold securities.”

From June 2009 to December 2010, at least 28 foreign investors wired more than CDN$360,000 for shares of BMF.

As for Liquid Gold, it too received money from foreign investors, some of them sending money to both BMF and Liquid Gold, but the OSC also tracked US$2.6-million flowing into its accounts, the source of which is a mystery.

The money soon flowed back out, through cash withdrawals used to pay the personal expenses of those involved, the OSC said.

The high life for Mr. Winick started to unravel when he was arrested in Bangkok on March 15, 2011, accused of running an illegal telemarketing fraud, what is called a “boiler room” operation, where high-pressure salesmen work to unload dubious investments. The Royal Thai Police seized three computer memory sticks containing about 200,000 files on the boiler room and its activities, including scripts for cold-calling potential victims and email pitches. The files were turned over to the RCMP.

A search warrant executed at the Ontario home of a colleague produced more than 10 banker’s boxes of documents as evidence. The OSC issued a temporary cease trade order then.

The OSC heard from victim investors living in Britain, Israel, Germany, Ireland, Belgium, Sweden, Denmark, Norway, Finland, South Africa and others who said they received unsolicited telephone calls from Denver Gardner promoting BMF and Liquid Gold as investments.

Investigators then sifted through records of 11 bank accounts and credit card accounts.

The OSC determined the Liquid Gold and BMF security sales were “entirely fraudulent” and that Mr. Winick and Mr. Curry had repeatedly breached the Securities Act. The OSC has asked for a lifetime ban and a $250,000 fine against Mr. Curry.

Both men, however, declined to respond to the OSC throughout the proceedings and they did not a representative at Thursday’s hearing. The two were named last month as fugitives in the sweeping U.S. case and arrested again in Thailand.

James Carnwath, the commissioner hearing the Toronto case, reserved his decision on the men’s penalty.

Stiff as the OSC’s submission on penalty is, it pales in comparison to what Mr. Winick and Mr. Curry face in New York, where they could be sentenced to more than 20 years in prison on each charge if convicted of conspiracy, wire fraud and securities fraud.